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22/06/2015

Income Tax Return Filing for Beginners

For a beginner, income tax return filing may seem like a big
deal. If this is your first time at it, here's are some pointers to help you
sail.

1. Should I file a
Return?

The IT department requires that one must file an income tax
return if their total income is more than Rs 2,50,000. This total income is
essentially the sum of income earned from all sources - salary, interest income
from the bank, any rental income etc. Also the Rs 2,50,000 is your gross income
before reducing any Deductions. Non-filing of returns may attract some
penalties from the IT department.

2. All my tax is
already deducted?

While, TDS may already have been deducted from your salary
and other incomes, disclosing all your incomes and filing your return timely is
your responsibility. So we go back to the thumb rule of 'file a return where
your income exceeds Rs 2,50,000', whether or not TDS is deducted, all taxes may
have been paid - the IT department still wants you to submit your IT Return.

3. My employer gave
me a Form 16?

Your Form 16 is like a certificate your employer gave you
for all the taxes they deducted before paying you salary. In fact, anyone who
deducts tax before paying you is required to give you a certificate of it. Your
Form 16 has other vital information which will help you file your return easily
- so do remember to get hold of this document. If you changed jobs during the
year, you'll have as many Form 16s.

4. I don't know what
is my total Income?

Your income is the sum total of your income from the
following heads - income from salaries, income from house property, income from
capital gains, Income from business & profession and Income from other
sources.

Income from Salary, HRA, other allowances basically all the
money you receive while rendering your job as a result of your employment
agreement. Income from House Property Income from your house that you have
rented. Or if you have taken a loan for a house property that own and live in,
the interest payout shall be your loss under this head. This loss can be
adjusted against incomes from other heads.

Income from Capital Gains Income from gain or loss when you
sell a capital asset. For example, sale of shares, mutual funds etc. Income
from Business or Profession Income/loss that arises as a result of carrying on
a business or profession. Income from Other Sources This is the residual head
-includes your income from savings bank accounts, fixed deposits, family
pension or gifts received.

You can choose to disclose all your incomes to your employer
and they will deduct tax on them. This saves you the hassle of paying taxes
yourself. Now while filing your return, make sure you have considered all
sources of income including interest on your savings bank account, interest
from FDs or any shares you sold during the year. Your tax return should mention
all your incomes.

5. What are
deductions from income?

Certain deductions are available under section 80C to 80U.
These deductions are allowed from your gross income and may help you move down
a slab as well as reduce your tax outgo, so make the most of them. Your
contributions to EPF, deposits to PPF, life insurance premium payments are all
eligible to be deducted under section 80C. The maximum amount you can claim
under section 80C is Rs 1,50,000 for financial year 2014-15. That's a lot of
reduction from your gross income. If you have taken health insurance, a
deduction is allowed under section 80D, for interest payment on education loans
deduction can be claimed under section 80E and a lot of other deductions are
available too, if you meet the conditions listed therein.

6. How do I go about filing my return?

You can simply upload your Form 16 on Clear
Tax and populate your return. You can also go head by head and keep adding
details of your incomes. Make sure you have mentioned all the deductions you
want to claim. Use your Form 26AS to get a sense of all the TDS that has been
deducted against your PAN number and take credit of this TDS against your final
tax liability. Or if excess TDS has been deducted, you may be in a refund
situation. Form 26AS will also help you identify all the incomes you need to
report if they've been subjected to TDS. You'll see your interest income from
the bank and the TDS deducted on it, so you can add the income under the head
'income from other sources' and take credit for TDS deducted. Of course, your
return must include all incomes, whether or not TDS has been deducted on them.
Do remember to enter your personal information like PAN, phone number, email
address and bank account number accurately. Usually salary returns are not
complex and you'll be done in a matter of few minutes.